US Airways

(U) - Get Report

averted a unilateral shutdown of operations Saturday, when it reached a tentative contract agreement with its flight attendants union.

US Airways, the sixth-largest U.S. airline, first drew the union's ire with an attempt to lower costs by reducing wages and benefits to a level at par with average contracts at four rival airlines, plus 1%. The

Association of Flight Attendants

represents 10,000 flight attendants at US Airways. The airline responded to the union's threat to strike with a counterthreat to shut down operations if no agreement was reached by 12:01 a.m. on Saturday.

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With the settlement, US Airways continued to operate its normal flight schedule.

Analysts estimated that US Airways would lose between $10 million and $15 million a day, or 10 to 12 cents a share, in earnings if a shutdown occurred.

The new contract, reached after both sides delayed the strike/shutdown deadline, will give flight attendants an 11% pay raise over five years, a 5% signing bonus and improved retirement benefits, according to union officials.

Observers were confident that the Association of Flight Attendants' negotiating committee would approve the tentative agreement,



US Airways carries an average of 153,000 passengers a day and controls about a third of the air traffic in the U.S. Northeast.